Tuesday, December 4, 2018

For the first time in recent memory, seasonal conditions are aligning with the real estate market to create a Goldilocks beginning to the winter season. After nearly a decade of winter starting too late or coming in too heavily, a series of storms from Thanksgiving into early December have created mid-winter conditions to start the season. Combined with continued strong real estate conditions, a perfect storm for mountain property is in the making.

Despite the traditional 4th quarter taper for real estate activity, there remains considerable deal flow in the market. November experienced 137 residential transactions at an average price of $911,537. These figures dramatically outperform historical averages, falling short only in comparison to the record activity during this period in 2017. Consistent with much of this year, November fell short of last year’s volume by 15% while surging on average price by 13%.

Premium sales continue to drive pricing upward buoyed in November by yet another 4 Martis Camp homes ranging from $3,075,000 - $7,000,000. Within Northstar, a Ritz Carlton Penthouse Residence traded for $4,400,000, while Lahontan and a rare Sugar Bowl home sale each saw trades near $3 million.

While word of real estate slowdowns abound in outlying regions, the Tahoe-Truckee market continues to thrive. Available supply remains titled in the favor of sellers at just over 4 months’ inventory. Demand coming from Northern California communities has intensified as a greater number of high-wealth families find retreat in the mountains, whether as primary owners seeking a lifestyle enhancement or the traditional second homeowner. During the tragic Camp Fire in November, countless Bay Area families decamped for clean mountain air as schools were cancelled. The commentary from a remarkable number of those impacted was contemplation of a lifestyle change to the mountains where traffic is minimal and the pace less hectic. Local infrastructure has kept pace with the needs of these consumers creating the necessary components to complete such a move including high-achieving schools, high capacity internet service and expanded airport capacity. Trails, ski slopes, blue skies and clean air are fixed commodities.

With a Goldilocks season upon us, the focus on the market is likely to shift to Mountain properties. As the saying goes, it is easier to drive to golf / trails in the summer than to skiing in the winter. When conditions permit, the value of mountain resort living becomes obvious turning the spotlight on new offerings. Mountainside at Northstar will be launching its newest project; Boulders in December after recently selling out its Stellar Collection. Similarly, look for interest in the Village at Northstar and other premiere mountain offerings to gain meaningful attention in the coming months.

I hope that you’ll be able to experience this remarkable start to winter in the coming weeks. In the meantime, best wishes for a happy and healthy holiday season.
Photo courtesy of Tahoe Mountain Lodging

Thursday, November 1, 2018

According to the rhythm of Tahoe-Truckee real estate, October is typically the zenith for closed transactions in any given year.

2018 appears to have peaked out early with a massive month of August while otherwise following a generally traditional pattern. As has been the case for most of 2018, the number of transactions will lag the prior year slightly however average price is markedly higher driven by a huge volume of premium sales.

An average sale price of $1,050,213 for October reflects an increase of 26% over the same period in 2017. Median price was also up an impressive 14% year over year.

Unlike recent months where singular mega-sales have driven average price upward, October saw a steady flow of high-end sales including 4 residential transactions in Martis Camp from $3.6m to $7.3m, another 4 in Lahontan from $2.2m - $3.5m, and 9 transactions in Northstar as focus begins to shift toward winter mountain property.

At Northstar, the Mountainside community experienced the sellout of its Stellar Collection with the final on-mountain residence in two distinct enclaves sold out. This sets it up nicely for the release of Boulders, an ideally balanced project of elegant mountain homes starting at $2.2m.

With the end of summer came the final sales within the Legacy Collection at Old Greenwood. Within this community, the introduction of diverse product has proved stimulating with a record quantity of custom and multi-family homes trading at values not seen since before the recession.

Consistent with the figures present above, inventory remains slightly tilted in the seller’s favor at just under 5 months’ supply. This number is slightly elevated from the same period last year largely inflated by overly ambitious, and largely unmotivated, sellers.

Thus, we conclude the peak selling season for 2018 in fine fashion. While the market will remain throughout the entire year, there will be a taper through year end and into early January before winter closings pick back up. The economic landscape may look different 90 days from now however the fundamental elements that make Lake Tahoe homeownership rewarding will remain constant.

Wednesday, October 3, 2018

The third quarter of 2018 was record setting for real estate in the Tahoe Truckee region by every measure but for one. Total sales volume and average price hit all-time highs while median price equaled the 2006 market peak. Only the total number of sales units fell behind the same period last year due, in part, to a supply constrained market.

Total sales volume from July through September totaled $540,385,789. The second ever period eclipsing a half billion and pushing higher than the same time in 2017 by 7%. With the total number of transactions lagging by 7%, the market is being driven by premium inventory. In fact, average price (a metric more easily manipulated by extraordinarily high prices), surged by 14% from $903,576 in 2017 to $1,037,785.

In good markets and bad, the third quarter begins a steady climb as the regional market gains momentum when summer visitors combine with anticipation of winter-to-come. This momentum will typically peak with closed transactions in October before tapering to year end.

Driving activity during Q3, were an extraordinary number of premiere transactions of both Tahoe lakefront properties and Martis Camp estate homes. In total, 4 properties crested $10 million including Tahoe Mountain Realty’s $24,000,000 masterpiece sale on Tahoe’s West Shore. Martis Camp, a community that didn’t exist when the market last peaked in 2006, transacted ten homes in the last 90 days from $4,185,000 - $11,750,000 adding $64,000,000 to the region’s transaction volume.

With any market, the wealth is not distributed equally. While most residential structures have appreciated at a healthy clip, raw land has continued to depreciate. In addition to simple supply and demand considerations, land values have even greater variability based upon construction costs. Building cost has soared at a rate even greater than either inflation or home appreciation due to a complex combination of rising commodity prices, regulatory costs and exceptionally tight (and busy) labor supply. As a result, residual land value, defined as the value of a finished new home minus the cost to build, is actually inverted in many neighborhoods throughout the region. As a result, land values hover closer to mid-recession lows than peaking home values.

Looking ahead, Q4 appears poised to maintain at the steady pace of recent years. At 5 month’s supply, there is sufficient inventory to the consumers currently engaged though many are accumulating significantly days on market for having been ambitiously priced.

While the current bull market is showing no sign of major correction, a plateauing appears inevitable as the buyer pool becomes saturated. Whether such a slowing comes before the end of 2018 is yet to be seen. Regardless, the beauty and health of the region remain recession-proof commodities.

Thursday, August 2, 2018

The local real estate market had spent much of 2018 in a latent state with high demand constrained by unusually tight supply. As is often the case, spring brought a wave of new inventory allowing the market to show kinetic energy in the form of increased deal flow.

July, 2018 outpaced the same month a year prior by 1% after comparatively lagging through the entire second quarter. More notably, the market gravitated toward high-end and super-premium offerings exploding average price by 32% year-over-year to $1,058,488. The bias toward higher-end properties also jumped median price by 15% and total transaction volume by 35%.

This transaction marks the third sale above $20,000,000 in 2018 joining previous lakefront transfers of $22,865,000 and $40,000,000. Prior to 2018, just two published sales have ever eclipsed $20,000,000. Lakefront property on Tahoe has always been the pinnacle of mountain homeownership in California. Recently, strong market forces combined with the availability of rare and unique updated properties have created a groundswell of interest in premium real estate.

This influx of premium sales has created a widening gap between average and median price to the point where year-to-date average price ($1,091,966) is nearly double that of the median price ($642,000).

This is indicative of rising wealth creation in Tahoe’s Northern California feeder market wherein quality product in a beautiful setting is of increasingly greater intrinsic value. As the San Francisco Bay Area has grown more crowded and commerce more intense, successful consumers are finding the virtue of retreating to the woods to be worth the premium.

Such conditions can’t continue indefinitely but the trend is a strong reflection of the values of our consumers. One need only study the parking lots of the region’s popular trailheads or ski resorts to understand the need for time in nature.

Friday, July 27, 2018

One of Tahoe’s most anticipated annual events is almost here. The Lake Tahoe Concours d’ Elegance boat show will take place August 10-11, 2018. For its 46th year, the Concours will be staged at the historic Obexer’s Boat Company in Homewood along Lake Tahoe’s idyllic West Shore.

The history of the Lake Tahoe Councours d’Elegance began in 1972 when a group of Tahoe Yacht Club members and friends got together to share their passion for wooden boats. From this modest beginning, the event has grown significantly and continues to focus on improving the quality of the show exhibits and enthusiastically sharing and educating the public about these immaculate boats.

Gorgeous wooden boats will be on display for viewing and will be judged in their respective categories. The goal of the judges is to reward those who have restored their boats to the highest level of authenticity as they appeared when they were shipped from the factory. Each boat will be judged on its own merit and multiple awards can be won in each class.

Along with the boat show, there is a range of social event opportunities to participate in. All of the social events require tickets and will sell out so it is important to plan ahead. The Opening Dinner kicks off the weekend on Thursday, August 9th at the West Shore Café. Men’s and Ladies Lunch events will take place on Sunday, August 12th. The Tahoe Yacht Club will also be hosting a recap movie from the 2018 Concours and also the “Woody Over The Bottom Race” which is like a parade of wooden boats to conclude another memorable Concours weekend.

Wooden boats and Tahoe are synonymous with each other. The Lake Tahoe Concours d’Elegance is the perfect event and setting to take in the natural beauty of Tahoe and appreciate the history and restoration of the “Woody”.

Friday, July 6, 2018

The Lake Tahoe Shakespeare
festival is in full swing this summer on the pristine shores of Lake Tahoe at
Sand Harbor. Bringing world class artists and entertainment to Lake Tahoe each
summer, the experience is truly one of a kind. This year, the featured
performances are Macbeth, Beehive and the Showcase Series. The setting for the
performances is unparalleled enjoying views of Lake Tahoe, seating on the sand
and table service or order-ahead dining for the show. There is not a bad seat in
the house.

Macbeth needs no introduction
as one of Shakespeare’s most well-known tragedies. What is unique to this
performance is that the seating at the venue will be re-arranged to mimic an Elizabethan theatre so that there
are on-stage seating options. The result will be a very intimate and immersive
experience for the audience.

Beehive: The
60’s Musical is an off Broadway performance that celebrates the groovy
women musicians who made the 60’s memorable. Songs will be performed honoring
artists such as the Supremes, Janis Joplin and Aretha Franklin.

The Showcase
Series features many different performances ranging from the Reno Philharmonic
Orchestra, The Sierra Nevada Ballet, Jazz performances, famous acts such as
Super Diamond and more.

The Lake Tahoe Shakespeare
Festival is an enchanting experience that is not to be missed. For more
information click here.

During the first half of 2018 the Tahoe-Truckee region has seen an explosion at the highest reaches of the market with 66 properties trading at values in excess of $2,000,000; a figure that exceeds the 12-month total of 7 out of the last 10 years. Reduced supply combined with surging demand have resulted in slightly fewer sales at substantially higher prices, and conditions defining the performance of the market are satisfyingly linear.

The motivation of consumers seeking a lifestyle enhancement, whether as a primary or secondary home, in a beautiful mountain environment is easily understandable. With factors economic and cultural in alignment, the quantity of families making this quality of life decision has never been greater. In the simplest terms, there are generally more consumers in the marketplace than quality homes to buy.

Premium lakefront offerings, those that have been updated or rebuilt and sit on remarkably parcels of land, have led this charge with three sales topping $20,000,000 and another handful in play for the second half of 2018. Not far behind traditional lakefront estates on premium values but at the opposite end of design spectrum, is the continued phenomenon of Martis Camp. With new, modern homes and an unrivaled amenity package, home sales have doubled year over year while values reach to $8 million and above for select offerings.

Such robust activity is somewhat atypical of the season; particularly after a late-arriving winter. The second half of any given year will see nearly double the transaction volume of the first half. The current sense is that the only factor limiting this potential is restrained supply. Inventory levels have been hovering around 3 months’ supply for much of the last 12 months; approximately 50% below a balanced market. As spring typically brings new listings to market, we currently sit at a balanced 6-month supply. With the aforementioned interest piquing, conditions are ripe for a sensational last two quarters of 2018.

I look forward to being your go-to resource for navigating the dynamics of our unique marketplace.

Tuesday, June 19, 2018

PJ’s summer
concert series kicked off this week and will continue every Tuesday evening
through September 4th from 5:30PM-7:30PM. Located on the lawn outside of PJ’s restaurant
at Gray’s Crossing, the setting is unreal with open grass seating and huge
mountain views as a backdrop. It is easy to see why these concerts have become
a summer tradition in Truckee.

Seating options include
first-come-first-serve space for blankets and chairs on the lawn, or
reservations are welcome for those who would like a table dining experience
while enjoying the music. For those on the lawn, there are walk up food options
available for purchase including burgers, hot dogs and sandwiches along with a
full bar. Table reservations will enjoy a specialty BBQ menu and buffet that
includes PJ’s signature ribs, chicken, salads, desserts and more. Reservation
dining can be booked in advance and usually fills up fast.

Next Tuesday, look for Peter
Joseph Burtt and The Kingtide on the stage at PJ’s. Burtt’s music draws on
influences from time he spent studying and playing with musicians in Africa,
and much of his music is played on traditional instruments like the 26 stringed
kora. Look for well-known local acts on the calendar as well such as the Dead
Winter Carpenters, The Serina Dawn Band, and everyone’s favorite: Ike and
Martin.

Sitting on the grass, enjoying
breathtaking views and music on a summer evening is pretty perfect. PJ’s is the
place to be this summer to celebrate long, gorgeous Tahoe summer days.